The long farewell: Peugeot' departure from the U.S. market

Business Horizons, May-June, 1995 by Jean-Loup Archawski, Francis W. Wolek

How many and at what locations are dealers and authorized service centers needed? What service training, parts availability, and payment policies are critical to providing Peugeot owners with responsive, high-value service? What warranty policies are needed to meet competitive standards and in which specifics is it most advantageous to exceed these standards? These too are questions Peugeot must address before it can return. Here too a relationship of trust and open interaction must be built. Not with consumers, whose legitimate concern is with car performance rather than system operation. The parties in this relationship are Peugeot's allies, its core dealers who worked most diligently in the past and remain dedicated to the value Peugeot provided to the American public.

Relationship building is more than information exchange. For Peugeot to establish trust, it will have to act on issues its enthusiasts raise about the Peugeots they are still driving. Our survey of owners indicates that investments of funds, talent, and policy revisions may well be needed in the competence and geographic depth of the company's service, promptness of meeting warranty expectations, prices on replacement parts, and trade-in value that was adversely affected by Peugeot's withdrawal. If the company is not committed to meeting such expectations of loyal owners, it would be best for it to limit its American experience to applying the lessons of the past to other markets. It is going to need those lessons in confronting the intensifying competition in Europe and the third world.

Peugeot managers must learn from their history. Simply putting a new car on the American market, no matter how excellent, will merely repeat the past failure. Before offering cars to American consumers, Peugeot must build a relationship with dealers, suppliers, and former customers and use that interaction to build a comprehensive system to guarantee satisfied driving for years. Peugeot will only then experience the success the company and its automobile so richly deserve.

Notes

1. The minutes of the Peugeot dealers' council disclosed that cars to be shipped to the U.S. were produced by modifying an assembly line used to produce European models. Since the modification entailed a high setup cost, American cars were produced only twice a year during the 1970s and early 1980s. As a result, cars delivered to the U.S. reflected market intelligence that could be six months out of date.

2. Peugeot executives have, with understandable pride, allowed us to examine market research documenting that comfort and road handling account for customer loyalty. At no time, however, has the discussion continued to how Peugeot can insure that customers achieve this loyalty. The propensity of Peugeot executives to stress product engineering is demonstrated in their concern that the company will reenter the U.S. with a product that excites their past customers (largely middle-aged consumers). This reaction demonstrates a narrowness in understanding the value of customer loyalty, for it is not only important what car past customers would buy but also what they would encourage others to buy. While Peugeot may find that its past owners are not the market for a sporty runabout, the children and younger associates of loyalists may well be a different story.